A brief outline
Wholesaling is a low-risk way for investors to hit the ground running in the real estate industry. Investors don’t need to fork out a lot of capital and a profit is easy to make. However, it all comes down to finding the right property, this is the key to making your real estate journey in wholesaling successful.
Wholesaling is a popular way for investors to dive headfirst into real estate, without needing to put themselves in a risky position financially. Wholesaling requires less time than other types of real estate investing because investors are essentially finding great real estate deals, securing them, and selling them on to another investor for a higher price. Wholesalers don’t typically buy the property, which means they have less financial risk, and they can make their profit by selling the property to another investor.
In other words, the main goal for a real estate wholesaler is to find wholesale properties. While there are the traditional methods of finding wholesale properties, we’ll also take you through some of the lesser-known methods that savvy investors use to make sure they’ve covered all their bases. For many wholesalers who are looking for their first deal, this may be the biggest challenge of their journey. For those who are looking to begin their wholesaling journey, let’s delve into the topic of how to find properties to wholesale.
What are wholesale properties?
The first thing to cover is what the term “wholesale properties” refers to. Wholesale properties are homes that are currently owned by distressed homeowners. This fact makes them motivated sellers because they are often in dire need of selling the house quickly. It’s a prime opportunity for real estate wholesalers who are looking for deals just like this.
Wholesalers will often assign a contract to the property which gives them the buying rights to the house, which they will then sell this to the next investor who will sign a deal with the wholesaler for the buying rights to the house. Alternatively, some wholesalers choose to do a double closing, which involves the wholesaler buying the home and then selling it as soon as possible.
How to find listed properties to wholesale
Wholesale properties aren’t as easy to find as traditional properties for sale. They are being sold by a very specific type of seller, so searching in the usual places isn’t necessarily the solution. Listed properties refers to properties that have been listed on the MLS (Multiple Listings Service). These are properties that have been listed by private sellers, or bank-owned properties, or properties that are in pre-foreclosure. Here’s how to find listed properties to wholesale:
1. Search the MLS
Naturally, this is the first place most people would start looking for a listed property. However, it’s important to broaden the scope of your search to include private sellers, foreclosures and pre-foreclosures. Search for properties that have been listed for longer than 90 days, the longer a house has been on the market the more motivated the owner will be to get it sold.
2. Hop onto FlipScout
FlipScout is a useful online tool developed by short-term money lender New Silver, which allows investors to find their next property deal easily. You can enter the city and state where you’re looking for properties, then the zip code, and find a variety of properties available at your fingertips. Each property will have insights displayed with it, such as the ROI and after-repair value, which makes this a great way for investors to quickly spot a good deal.
3. Find pre-foreclosures
Properties that are in pre-foreclosure are in the short sale phase, which means that the owners are hoping to sell the home quickly to avoid going into foreclosure. This is just the kind of motivated seller that would make for a good deal for a wholesaler. You can find pre-foreclosure properties on the big real estate websites such as Zillow, in the public county records, or on specific websites like Foreclosure.com.
How to find unlisted properties to wholesale
When it comes to finding wholesale properties, unlisted houses can be a goldmine. Unlisted properties are those that haven’t been listed on the MLS or on the market at all yet. Which means that there’s zero competition for these houses because nobody else will know that they have become available. You can find unlisted properties by using any or all of the following methods.
1. Direct mail
As the name suggests, direct mail marketing involves sending targeted mails to homeowners, in the hopes that you can buy their home. These homes aren’t listed on the market yet and may not have been up for sale but if the offer is enticing enough, it could persuade the owner to sell. Which means that there is no competition and no other offers on the property. It’s a good idea to target owners who don’t live in the home, properties that are probate and owners that are in pre-foreclosure.
2. Drive for dollars
Driving for dollars is a process whereby you drive around a neighborhood looking for properties that could fit the bill for a wholesale deal. These could be distressed properties or vacant properties that you spot on your drive, and you can either leave a letter in the mailbox or make a note of the address and look it up so that you can locate the owners.
3. Advertise for it
While this may seem cliché or old-school, using signs can be a successful way to find properties that are ideal for a wholesale deal by attracting buyers. Advertising with pay-per-click ads or on social media is also a good way to get the word out that you’re looking for houses to buy. The more buyers you can attract, the better.
4. Visit law firms
Properties often become available after events like divorce or separation, and probate attorneys and family law firms will be the first to know about these properties before they go on the market. You can approach these firms to discover any properties that may be coming onto the market soon due to unfortunate circumstances, and get ahead of the competition.
How to find vacant houses to wholesale
Vacant or abandoned properties are sometimes the best deals for wholesalers because they’re usually owned by a lender or homeowner who is more than happy to have the property taken off their hands as quickly as possible, since there is nobody living there. Just remember that these properties will be rundown, they won’t have been maintained and they will likely need some serious repairs and renovations. Here’s how to find vacant homes:
- Driving around the neighborhood: The most common way to locate vacant properties is to drive around the neighborhood and look for them. A sure sign that a home is vacant is boarded up windows, piles of trash and an unkept yard. Once you’ve located these properties you can get to work on finding the owners and pitching your offer to them. It’s a good idea to chat to the neighbors of any vacant properties as well, they might have more information and be willing to help you so that they can get the property sold too.
- Contact the Post office: Contact the local post office to see whether the employees know which homes are no longer receiving mail. This is a sure sign that the home is vacant because the post office will have informed the owner that no more mail is being delivered because it’s not being collected.
- Research Estate sales: Research estate sales and look up the owner’s name, you can then ask them about the condition of the property and if it sounds like a good deal, take it further.
- Direct Mail Advertising: Setting up ads where you mention specifically that you will buy vacant properties can be a useful way to attract sellers or people who know of a vacant property in their neighborhood that they’d like to see sold.
How to find distressed properties to wholesale
Distressed properties are usually houses that were owned by people who could no longer make their mortgage payments. So, the houses are now owned by the bank, in foreclosure, in a period of short sale or REO (Real Estate Owned). If you’re looking for distressed properties you can try these methods:
- Online search: You can find distressed properties listed on the good old MLS, similar to a traditional property search. You can also find distressed properties on other large real estate websites. There are also specific distressed property websites such as Hubzu and foreclosure.com.
- Auctions: Property auctions are usually where distressed properties or homes in foreclosure are sold, so these are a hotspot for real estate investors. You can find auctions online on websites like auction.com or realtytrac.com, alternatively you can find them advertised in the local newspaper.
- County offices: Distressed properties can be found at your local sheriff’s department or county offices where foreclosure listings will be available. You can check their websites by looking up properties with delinquent taxes or delinquent mortgages and you should come across a list of distressed properties.
- Banks and financial institutions: Banks and other lenders often list the available properties that they currently have in their possession on their websites so it’s a good idea to check these.
- Drive-by: Driving the neighborhood again is one of the old reliable methods for finding distressed properties. Look for things like water or fire damage, overgrown yards and any other signs which indicate that a house is not being maintained properly. Once you’ve found distressed properties you can contact the owners and make your offer.
Final tips for finding houses to wholesale
Finding the right properties is crucial to succeeding in real estate wholesaling, and while it may be a relatively low-risk environment, money can only be made once the right properties are found. As such, it’s advisable to use as many of the methods we’ve mentioned above to find wholesale properties, and you’ll be more likely to find a good deal quicker. Make sure that you’re well informed on the rest of the process before you begin your search however, because once you’ve found a good deal, you’ll need to make the right offer on the property and secure it as quickly as possible to avoid losing out to another savvy investor.
Lastly, you may also be interested in how to start reverse wholesaling. This is another way to start your real estate investing journey.